Indian aid received in Nepal in the form of small development projects (SDPs) will be channelled through the budgetary system of federal government from now onwards, The Kathmandu Post reports.
This will allow the government the control over where and how the funds are spent, keep track of the project progress and maintain financial transparency. Earlier, the Indian government, through its embassy in Kathmandu, had been directly funding the projects up to Rs 50 million in any part of the country purely at its own discretion.
After the tenure of the SDP scheme expired on August 5, 2017, India has expressed interest to renew the programme for the fifth time since it was first launched in November 2003.
The former government, led by Sher Bahadur Deuba of Nepali Congress, on November 30, 2017, approved the extension; but under the conditions that the funds are passed through Nepal’s national system and the executing agency is determined the Nepal government.
“The Indian government agreed to the conditions set by Nepal in the last week of March. Now the Nepal government can track the spending of Indian grants under the SDP,” a senior official at the Finance Ministry said.
The Indian Embassy has been extending assistance to various projects at the local level, including schools, colleges and hospitals under the SDP scheme. Since all these are controlled by the embassy, the government does not have details on how and where the Indian grants have been spent.
Under the old arrangement, though, projects under SDPs are supposed to be implemented through local bodies and local offices of the government such as District Development Committees (DDCs), municipalities and division offices of Department of Urban Development and Building Construction.
The government is yet to finalise how the Indian aid meant for SDPs is received and how the projects would be implemented under the newly adopted federal set-up.
Tek Bahadur Khatri, under-secretary at the ministry, said there has been discussion on allowing the municipalities and rural municipalities to execute the projects under SDPs.
“We are also discussing on the modality of channelling the resources in a way that funds are first received by the central government’s fund before they are transferred to the municipalities and rural municipalities in the form of conditional grants,” he said.
No decision has been reached on the modality of project selection which will be implemented under SDPs. As far as the ongoing discussions are concerned, the local bodies will choose the projects and recommend them to the Finance Ministry. The ministry will then short-list the projects and send them to the Indian Embassy for endorsement.
The central government is authorised by the constitution to invest the foreign aid. By bringing SDP funds under central government’s purview, an official said, it will ensure that the constitution is properly followed.